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Generational Dynamics Web Log for 22-Jan-2010
22-Jan-10 News - President Obama declares war on banks

Web Log - January, 2010

22-Jan-10 News - President Obama declares war on banks

And he calls the Mideast situation 'intractable.'

President Obama declares war on banks

President Obama gave a very interesting speech on Thursday. Extracts:

"For while the financial system is far stronger today than it was one year ago, it's still operating under the same rules that led to its near collapse. These are rules that allowed firms to act contrary to the interests of customers; to conceal their exposure to debt through complex financial dealings; to benefit from taxpayer-insured deposits while making speculative investments; and to take on risks so vast that they posed threats to the entire system.

That's why we are seeking reforms to protect consumers; we intend to close loopholes that allowed big financial firms to trade risky financial products like credit defaults swaps and other derivatives without oversight; to identify system-wide risks that could cause a meltdown; to strengthen capital and liquidity requirements to make the system more stable; and to ensure that the failure of any large firm does not take the entire economy down with it. Never again will the American taxpayer be held hostage by a bank that is "too big to fail." ...

My message to members of Congress of both parties is that we have to get this done. And my message to leaders of the financial industry is to work with us, and not against us, on needed reforms. I welcome constructive input from folks in the financial sector. But what we've seen so far, in recent weeks, is an army of industry lobbyists from Wall Street descending on Capitol Hill to try and block basic and common-sense rules of the road that would protect our economy and the American people.

So if these folks want a fight, it's a fight I'm ready to have. And my resolve is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see soaring profits and obscene bonuses at some of the very firms claiming that they can't lend more to small business, they can't keep credit card rates low, they can't pay a fee to refund taxpayers for the bailout without passing on the cost to shareholders or customers -- that's the claims they're making. It's exactly this kind of irresponsibility that makes clear reform is necessary."

So President Obama is declaring war on the banks.

If you look at the history of the last century, this is almost hilarious. During the 1930s Great Depression, all sorts of laws were passed to regulate banks.

As the generations of Great Depression survivors disappeared (retired or died), all these 1930s regulations were ignored or repealed by the Gen-Xers and Boomers, who thought of them as vestigial remnants of an age dominated by doddering old fools. (See "Markets fall as investors are increasingly unsettled by bad economic news."

Since 2007, the Gen-Xers are learning the same rules that the doddering old fools of the 1930s learned, and we see the result today: President Obama is saying we have to regulate the banks again.

Pundits are pointing out that Obama is pivoting to a new issue, having suffered a major political defeat on Tuesday with the election of Republican Scott Brown as Senator from Massachusetts, in the seat formerly occupied by ultra-liberal Ted Kennedy. The vote is considered a repudiation of Obama himself, and particularly a repudiation of his health care plan, which I've called a proposal of economic insanity.

History tells us that this new issue is sure to be a winner for President Obama. Whereas his health plan was wildly unpopular, the public hatred being directed at banks is growing palpably each day.

History is repeating itself. As I've pointed out several times, when I was growing up in the 1950s, my parents and my teachers all hated bankers. I didn't understand it then, but I understand it today. Bankers in the 1930s perpetrated the same kind of fraud and extortion that they're practicing today, as standard operating procedure.

The fury directed at banks is going to grow, and will be around for decades. President Obama will do much better politically with this issue than he did with health care.

Finally, it's worth saying again that from the point of view of Generational Dynamics, the attitudes and behaviors of politicians are irrelevant; what's important are the attitudes and behaviors of the great masses of people, entire generations of people. These attitudes and behaviors follow generational trends that are completely independent of the wishes of the politicians. We're seeing this happen now, as Obama abandons his health care agenda and takes up his war against bankers.

Obama calls the Mideast situation 'really hard' and 'intractable'

President Obama didn't only talk about banks on Thursday. He also gave an interview to Time Magazine discussing a number of issues. Probably the most interesting part came near the end when he discussed his Mideast policy. In his statement, he refers to George Mitchell, the special envoy that he sent to the Mideast early in 2009 to negotiate a peace deal.

"I'll be honest with you. A) This is just really hard. Even for a guy like George Mitchell, who helped bring about the peace in Northern Ireland. This is as intractable a problem as you get. B) Both sides — the Israelis and the Palestinians — have found that the political environment, the nature of their coalitions or the divisions within their societies, were such that it was very hard for them to start engaging in a meaningful conversation. And I think that we overestimated our ability to persuade them to do so when their politics ran contrary to that. From [Palestinian Authority President Mahmoud] Abbas' perspective, he's got Hamas looking over his shoulder and, I think, an environment generally within the Arab world that feels impatient with any process.

And on the Israeli front — although the Israelis, I think, after a lot of time showed a willingness to make some modifications in their policies, they still found it very hard to move with any bold gestures. And so what we're going to have to do — I think it is absolutely true that what we did this year didn't produce the kind of breakthrough that we wanted, and if we had anticipated some of these political problems on both sides earlier, we might not have raised expectations as high. Moving forward, though, we are going to continue to work with both parties to recognize what I think is ultimately their deep-seated interest in a two-state solution in which Israel is secure and the Palestinians have sovereignty and can start focusing on developing their economy and improving the lives of their children and grandchildren."

To begin with, let's remember that Obama was going to heal the world on January 21, 2009, when he took office a year ago today. And that wasn't just an empty campaign promise; it was clear from his statements that he actually believed it. It was clear that the believed that the problems of the world were caused because President Bush was evil.

But now, after a year in office, his foreign policies have failed in pretty much every area. (See "After a week of foreign policy disasters, President Obama's entire program is adrift.")

So now, President Obama is apparently learning from his lessons, and becoming more realistic. He's changing his major domestic issue from health care to banking, and he's beginning to understand that the Mideast problem is "intractable."

This is what Generational Dynamics has been predicting for years. The Mideast is dominated by younger generations that have no desire to compromise with the other side. They're prepared to re-fight the genocidal 1948-49 war between Jews and Palestinians that followed the partitioning of Palestine and the creation of the state of Israel, and nothing's going to stop that.

President Obama mentioned the efforts of his envoy, George Mitchell, "who helped bring about the peace in Northern Ireland."

What Obama and Mitchell don't understand is that the Northern Ireland peace was negotiated during a generational Unraveling era, a time when peace treaties are relatively easy to agree on.

Things are quite different different today, when the Israelis and Palestinians are in a generational Crisis era, when a negotiated peace is almost impossible. It's a shame the Obama and Mitchell don't understand that.

(Comments: For reader comments, questions and discussion, see the 22-Jan-10 News - President Obama declares war on banks thread of the Generational Dynamics forum. Comments may be posted anonymously.) (22-Jan-2010) Permanent Link
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Generational Dynamics Web Log for 22-Jan-2010 22-Jan-10 News - President Obama declares war on banks

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Obama calls the Mideast situation 'really hard' and 'intractable'

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Generational Dynamics Web Log for 22-Jan-2010
22-Jan-10 News - President Obama declares war on banks